Auto suppliers jump on report Tesla to fully own China plant

By BLOOMBERG

Beijing • Auto-parts suppliers shares jumped in Asian trading after Wall Street Journal (WSJ) reported that Tesla Inc reached an agreement with Shanghai’s government to build a fully owned manufacturing facility in the city’s free trade zone.

“As far as I know, there is no such agreement,” Guo Lei, an official at Shanghai’s Economy and Information Technology Commission who is in charge of new-energy vehicle projects, said in a phone interview yesterday. In a statement, Palo Alto, California-based Tesla reiterated that it’s working with Shanghai’s government to explore local manufacturing.

Tesla signed a preliminary agreement with local authorities to produce cars in the city, a move that would help lower manufacturing and shipping costs, people familiar with the matter told Bloomberg News in June. Two of those people said they weren’t aware of any material change when they were contacted yesterday about the WSJ report.

Tesla’s production plans in the largest auto market are closely followed by investors and industry executives alike as China accelerates electric-car development and works on a timeframe to phase out conventional-engine cars. Chinese authorities are considering a proposal to allow overseas carmakers to set up wholly owned electric-vehicle factories in free-trade zones, a move that would give Tesla a greater range of options, people familiar with the matter said last month. Current rules require foreign automakers to have joint ventures with local companies for domestic production.